4. Productivity (Output/ Input Ratio)

The output to input ratio can be viewed as a measure of
productivity, that is, how much output can be produced per unit of
input. Figure 9 shows the differences in the relationship between
revenues from outputs and spending on inputs which contribute to
the differences in
FBI. The overall
average output to input ratio in 2015-16 was 1.08, meaning that for
every £1 spent on inputs, Scottish farm businesses were
generating £1.08 worth of outputs. The average for farms in
the upper quartile (relatively high performers) was around
£1.31, while for those in the lower quartile (relatively low
performers) it was around £0.83; an average loss of
£0.17 for every £1 spent.

Figure 9: Average output:input ratio by farm type and
quartile (lowest 25 per cent, average and upper 25 per cent) for
2015-16

It should be noted, however, that a higher output to input ratio
does not necessarily lead to a higher
FBI when comparing
across farm types.
FBI depends on both
the ratio between and the absolute levels of outputs and inputs.
For example, the upper quartile output:input ratio of specialist
sheep (
LFA) farms,
£1.51, was the highest of all farm types but the
FBI upper quartile
of specialist sheep (
LFA) farms,
£42,700, was the third lowest of all farm types. This was due
to the relatively low absolute value of outputs and inputs.